The demand planning process involves gathering and analyzing information. The data comes from several areas of a firm’s operations in order to forecast production needs. The information is used to determine the optimal inventory levels required to meet sales orders. Accurate demand forecasting helps manufacturers optimize their production processes and minimize costs associated with over- or under-stocking parts and materials. Reliable demand planning reduces the risk of stockouts. It does this by ensuring that sufficient inventory is available to always meet demand.
Processes and departments working together
Successful demand planning involves the combination of several key processes. These include demand forecasting, inventory management, demand sensing, demand optimization, and demand fulfillment. Each of these aspects must be managed effectively. This ensures the parts and materials needed by the shop floor are accurately forecasted and inventory is maintained at the optimal level.
Typically, the demand planning process is managed by both the inventory department and the purchasing department. Inventory management must ensure that there is sufficient stock available to meet current production needs. Then, purchasing must ensure orders are placed in time for delivery of new stock when needed and at prices that keep the firm competitive. Both departments must work together with the production and sales departments to plan for fluctuations in demand. this includes demand changes for product variations or sudden issues from unforeseen events. Accordingly, this involves a high degree of integration between all departments.
Getting the right management tools for the job
All the processes that make up demand planning operations can become quite complex to manage, especially through spreadsheets. Considering multiple departments within a manufacturing firm participate in the process, it becomes apparent that specialized software is almost a necessity to effectively manage the integration and data needed for demand planning.
Highly competitive firms typically rely on PLM or MRP software like Aligni to easily manage product data, vendor relationships and delivery timelines. This software effectively becomes the single source of truth for the engineering and production groups of the organization.
Overall, effective demand planning can help manufacturers improve their efficiency and throughput by making sure they have the right part in the right place at the right time. Manufacturers can reduce costs and meet deadlines while increasing manufacturing efficiency with effective demand planning processes in place,
Take the next step
Looking to get a better handle on connecting production needs with inventory quantities and orders? Time to give Aligni a try. Sign up now and learn how our advanced demand planning features can streamline your operations!
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